Key Facts
- •Payward group (Claimants) sought enforcement of a JAMS arbitration award against Maxim Chechetkin (Defendant) under the Arbitration Act 1996.
- •The arbitration, seated in San Francisco, concerned Chechetkin's losses on the Kraken cryptocurrency exchange, operated by Payward Ltd in the UK.
- •Chechetkin argued the award should not be enforced because it was contrary to public policy, specifically due to the Consumer Rights Act 2015 and the Financial Services and Markets Act 2000.
- •The arbitration clause in Chechetkin's contract with Payward Ltd stipulated California law and arbitration in San Francisco.
- •Chechetkin also had parallel proceedings in the English High Court alleging breaches of the Financial Services and Markets Act 2000 against Payward Ltd.
- •Miles J previously rejected a jurisdictional challenge by Payward Ltd in the English High Court, finding Chechetkin a consumer under the Civil Jurisdiction and Judgments Act 1982.
Legal Principles
Enforcement of an arbitration award may be refused if it would be contrary to public policy.
Arbitration Act 1996, s. 103(3)
A term in a consumer contract is unfair if, contrary to good faith, it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer.
Consumer Rights Act 2015, s. 62(4)
If a consumer contract has a close connection with the UK, the Consumer Rights Act 2015 applies despite a choice of foreign law.
Consumer Rights Act 2015, s. 74(1)
A person cannot carry on regulated activities in the UK without authorisation, and agreements made in contravention are unenforceable.
Financial Services and Markets Act 2000, ss. 19, 26
A court considering enforcement of an arbitration award is not bound by the tribunal's decision on its own jurisdiction.
Dallah Co v Ministry of Religious Affairs of Pakistan [2011] 1 AC 763
“Consumer” means an individual acting for purposes wholly or mainly outside their trade, business, craft or profession.
Consumer Rights Act 2015, s. 2(3)
Outcomes
The arbitration award was not enforced.
Enforcement would be contrary to UK public policy as it disregarded the Consumer Rights Act 2015 and the Financial Services and Markets Act 2000, and the arbitration clause was deemed unfair.